Finance Ministry keeps UPI free for P2P and sub-Rs 2,000 merchant payments; caps MDR to specified higher-value transactions
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What happened
The Ministry of Finance said on September 15 that UPI users will not pay charges for peer-to-peer payments and for merchant payments up to Rs 2,000. The ministry added that MDR will apply only to specified merchant transactions above that threshold, creating a split pricing structure by transaction type and value.
Why it matters
The announcement sets a new charging boundary for India's largest retail payments rail and changes expected economics for banks and payment service providers in higher-value merchant transactions. It also sets up follow-on decisions on notification language, merchant categories, interoperability treatment and supervision of downstream pricing.
India's Ministry of Finance announced on September 15 that UPI will remain free for peer-to-peer transfers and for merchant payments up to Rs 2,000, while merchant discount rate charges will apply only to specified merchant transactions above that threshold. The move alters the payments-policy framework by preserving zero-price access for mass users while opening a revenue channel for parts of the merchant-acquiring stack. For the Finance Ministry, RBI and NPCI, the immediate task is to convert the announcement into clear implementation rules without disrupting acceptance, pricing or political messaging.
Watch for
Ministry of Finance release of the detailed notification specifying merchant categories and MDR applicability thresholds by 2026-09-19 NPCI circular to member banks and payment apps on routing, billing and settlement treatment for UPI merchant transactions above Rs 2,000 by 2026-09-19 RBI statement or FAQ clarifying whether banks and PSPs may levy, pass through, or absorb MDR-related charges for affected UPI merchant transactions by 2026-09-19 Public pricing updates from PhonePe, Google Pay, Paytm or major acquirer banks for merchant UPI acceptance above Rs 2,000 by 2026-09-19
Sources
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